CHILE: Predictions Markets See Kast As Overwhelming Favourite For Presidency
Right-wing populist Republican Party candidate Jose Antonio Kast now sits as the overwhelming favourite to win the Chilean presidency in the 14 December second-round run-off, having come in a close second place in the 16 November first round. As noted earlier, Kast won 23.9% of the vote compared to 26.9% for far-left Communist Party candidate Jeanette Jara (see CHILE: Sunday's General Election Reveals Expected Market-Friendly Pivot To Right). With the contest now a straight shot between the far-left and far-right, Kast has improved his already-strong frontrunner position.
- In the days leading up to the first round, Kast had a ~70% implied probability of becoming the next president according to data from Polymarket. In the aftermath of the first round, this has increased to a 95.2% implied probability. With Kalshi, Kast also stands at a 95% implied probability, and 89% with Smarkets.
- In the event Kast wins, he will not have it all his own way in Congress. The two alliances on the right - the conservative Great and United Chile and the far-right Change for Chile - secured exactly half the seats in the 50-member Senate. However, they fell two seats short of an overall majority in the Chamber of Deputies. As such, support from the populist Party of the People of third-placed presidential candidate Francisco Parisi, will be needed to pass legislation.
- The reliance on the conservative alliance that backed Evelyn Matthei in the first round and Parisi's party is likely to limit Kast's ability to enact his more extreme policies.
Chart 1. Predictions Market Implied Probability of Winning Presidential Election, %
Source: Polymarket
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
